Cathay Financial outlook rosy

GOOD PROSPECTS Although earnings by the nation's largest financial group by assets were down in the first half of the year, profits are anticipated to improve substantially

By Amber Chung / STAFF REPORTER

The profitability of Cathay Financial Holding Co (國泰金控), the nation's largest financial group by assets, is expected to strengthen considerably, backed by reduced bad debt costs and extra capital gains from stock investment and derivatives, the company said yesterday.

For the first half of this year, Cathay Financial generated earnings of NT$9.1 billion (US$278 million), or NT$1.07 per share, down 15 percent from NT$10.6 billion, or NT$1.27 per share, a year ago.

The decline was a result of the increased provision expenses of banking arm Cathay United Bank (國泰世華銀行), which were made to cover potential bad debts and amounted to NT$11.7 billion amid the consumer bad loans storm during the January-June period.

Cathay Financial outperformed its rivals in profitability over the same period, compared with the net loss of NT$0.44 per share of Chinatrust Financial Holding Co (中信金控), Taiwan's largest credit card issuer, or Fubon Financial Holding Co's (富邦金控) profits of 0.47 per share.

However, the performance of the company looked less impressive in comparison with its immediate, smaller competitor Shin Kong Financial Holding Co (新光金控), which generated earnings of NT$1.32 per share.